Montreal Exchange Inc.

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Montréal Exchange
Mx logo en.jpg
Founded 1874
Headquarters Montréal, Canada
Key People Luc Fortin, Acting Interim President and CEO
Products Futures and options in equities, indexes, interest rates and currencies
Twitter @MtlExchange
LinkedIn Profile
Website www.m-x.ca

The Montréal Exchange (MX), a part of TMX Group following a 2008 acquisition, provides trading, clearing and settlement of futures and options in equities, indexes, interest-rates and currencies on its electronic platform. The Canadian group also has equity interests in the Boston Options Exchange, the Montreal Climate Exchange and the Canadian Resources Exchange (Carex).

The Montréal Exchange was ranked as the world's 30th-largest derivatives exchange by volume in 2010 according to the annual volume survey published by the Futures Industry Association (FIA).[1] The FIA report, published in March of 2011, notes that the exchange's total volume for 2010 jumped by 27.5% from the previous year, reaching about 44.3 million contracts.

History

The Montréal Exchange is Canada's oldest financial exchange, established in 1874 after 40 years of informal trading, primarily in financial and railroad stocks. It merged with the Canadian Stock Exchange in 1974, introducing stock options a year later, the first move towards dropping cash equities and becoming a pure-play derivatives exchange in 2005.[2]

The clearing unit was established in 1977 and, with derivatives becoming more important, changed its name to the Montréal Exchange in 1982. MX became Canada's sole derivatives exchange in 1999, when it also joined Globex under a 10-year agreement which gave it a monopoly over futures and options, while TSX became the sole equities platform. The looming expiry of the deal had seen the TSX announce plans to start a derivatives business after 2009.[3]

MX demutualized in 2000, taking full control of the clearinghouse. Full automation was introduced in 2001. The MX became a founding shareholder in the Boston Options Exchange in 2002 - BOX launched in February 2004 - with a 31.4 percent stake, announcing plans in October 2007 to lift this to 53.2 percent by acquiring shares from the Boston Stock Exchange[4]. In December 2005 it became a pure-play derivatives operation, and also signed a joint venture with the Chicago Climate Exchange to launch the Montreal Climate Exchange. The exchange opted to go public in 2006, listing its share on the TSX in March 2007. The same month saw a deal with the New York Mercantile Exchange to establish Carex, with NYMEX taking a 10 percent stake in the MX.[5] TMX Group, formerly known as TSX, the owner of the Toronto Stock Exchange, acquired the Montreal Exchange in a $1.3 billion transaction in 2008. The merged entity is now known as the TMX Group[6]. MX shareholders approved the deal on February 13, 2008[7].

Product Development

MX currently lists:

  • Equity derivatives (equity options)[8]
  • Currency derivatives (options on the US dollar:US/CAD)[9]
  • Index derivatives [10] [11]
  • Interest rate derivatives (bond and money markets)[12]

The three most active of Montreal Exchange's individual products (not including equity options as a group) include 10-year government of Canada bond futures (CGB), 3-month Canadian Bankers' Acceptance futures (BAX),and S&P Canada 60 Index Futures (SXF).[13] In November 2007, Montreal added futures on 30-year government of Canada bonds.[14]

The exchange introduced a new futures product based on the performance of the FTSE Emerging Markets Index on June 13, 2014. The FTSE Emerging Markets Index Futures (MX-EMF) are targeted at market participants seeking exposure to emerging markets for hedging, asset allocation, speculation and arbitrage.[15]

In September 2014, Montréal Exchange (MX) and Eris Exchange announced a licensing agreement for MX and Canadian Derivatives Clearing Corporation (CDCC) to offer trading and clearing of Canadian Dollar swap futures and options based on the Eris Methodology.

Clearing Services

The MX clearing house, the Canadian Derivatives Clearing Corporation (CDCC), provides central counterparty clearing services to participants. It holds a top investment rating and a strong reputation. The CDCC has completed regulatory rule changes allowing the clearing house to offer risk management services to partners in the OTC market.

Annual Volumes

2010

The Montreal Exchange traded 44,296,907 contracts in 2010, up a little more than 27 percent from the previous year.[16]

2009

The Montréal Exchange ranked number 30 in 2009 in the Futures Industry Association's global list of top 53 derivatives exchanges measured by volume but declined 8% on 2008's volume figure.[17] The FIA list, published in early April 2010, reports that that Montreal Exchange's total volume for 2009 dropped to 34.8 million from 38 million in 2008.

Market Data

The Market Data Services of the Montréal Exchange (the MX) manages sale and distribution of market data. It certifies vendors and establishes external and internal distribution and subscriber fee policies for real-time and delayed market data. Market data is available in the following types:

  • Real-time basis
  • Delayed basis (at least 15 minutes)
  • End-of day summary basis

Key People

References

  1. 2010 Annual Volume Survey. Futures Industry.org.
  2. History. MX.
  3. TSX joins consolidation race with Montreal deal. Financial Times.
  4. Press release. MX.
  5. Press Release. MX.
  6. Press release. Montreal Exchange.
  7. Press release. MX.
  8. "Equity Options”. www.m-x.ca.
  9. "Options on the U.S. Dollar”. www.m-x.ca.
  10. "Indices”. MX.
  11. Options List: Index and ETF options, Equity options, Currency options. MX.
  12. "Interest rates”. www.m-x.ca.
  13. "Monthly reports”. www.m-x.ca.
  14. MX expands govt. bonds. www.bloomberg.com.
  15. Montreal Exchange to Introduce Futures Contracts on the FTSE Emerging Markets Index. Automated Trader.
  16. TMX Group Inc. 2010 Annual Report (PDF). TMX Group.
  17. 2009 Annual Volume Survey. FIA magazine.